YESTERDAY’S budget was last night dubbed a “crucial down-payment” on future manufacturing growth.
However, not all its measures were welcomed, with the introduction of a carbon price floor of £16 per tonne by 2013 set to raise energy bills.
The coalition has introduced export credits for businesses, and raised research and development tax credit to 200% in April and 225% in 2012.
The coffers of the long-mooted Green Investment Bank have also swelled from £1bn to £3bn.
The bank is designed to give the low-carbon economy a push by backing riskier projects that may put off commercial lenders.
It is lined up for launch in 2012 but will not be able to borrow until 2015.
Manufacturing support organisation EEF’s chief executive Terry Scuoler said: “Today the Chancellor gave a clear recognition that we are in an international race for investment and that manufacturing is at the heart of this.
“He made a crucial down payment on creating a stronger and more balanced economy with measures to boost investment in technology, research and development, and skills.”
But, Mr Scuoler said, the costs incurred by the carbon price floor were “unwelcome”. He wants a “more co-ordinated and cost-effective approach to creating a low-carbon economy”.
EEF North East Council chair Phil Kite, who is managing director of County Durham engineering firm Astrum, estimated the carbon price floor would prompt a 5% increase in its bills, rising to around 10% when the floor hits £30 per tonne by 2020.
He said: “It’s certainly a big negative rather than something we’re merely unhappy with. There are enough taxes on energy at the moment.
“However, overall it was a reasonably good budget for manufacturing and it is encouraging the Chancellor recognised manufacturing is the area that will drive the economy forward and drive growth. Aspects such as the reduction in corporation tax and the R&D tax credit change were positive.”
Michael Mitten, managing director of Newcastle electrical machine repair company Houghton International said he welcomed the Government’s plans to fund new apprenticeships “from a selfish point of view”, as the company is hoping to significantly increase its apprentice head-count in the next 12 to 18 months.
Places on a new national work experience scheme will jump from 20,000 to 100,000 over two years, while funding will be provided for 40,000 new apprenticeships for young jobless citizens. The Government also plans to double university technical colleges from 12 to 24.
Mr Mitten said: “The skills we need just don’t exist in the open marketplace at the moment. I really like the idea of work placements.
“Engineering gets a bad press, and in some cases, it’s not even considered a viable option by kids in school. If you can bring kids in when they’re still young and show them what it’s all about, it’s good for both the young people and the businesses.”
Mr Mitten also backed the increase in the income tax threshold from £7,475 to around £8,105 in April next year. “This is going to help businesses with inflationary pay rises and put a bit more in people’s pockets,” he said.
“The drop in corporation tax is also a great help, as we’ve seen our bills getting higher and higher as we’ve grown. I also like the fact they’re simplifying the tax relief regulations, and that they’re holding off on bringing in new regulations for business with less than 10 staff.
“We don’t fall into that category, but small businesses have enough on their plates keeping the wolf from the door.
“My concern is that measures like this have been mooted before, but have been delivered in such a way that’s counter-productive because of the bureaucracy involved.”